Chris Lombardi puts defense and security under the spotlight, as he shares his takes on recent NATO and EU cooperation and provides insight into the company’s own long-term strategic partnerships in Europe.

Three trends are currently driving the global electricity sector: decarbonization, decentralization and differentiation. Utilities are making significant contributions to mitigate carbon emissions, while a technology revolution is …

Time to tax the non-compliers of Kyoto

This week the Kyoto Protocol, the international treaty that tries to control global warming, entered into force. It is nothing less than a historic event. But the entry into force should be a reason to look at the enormous task that is ahead of us in fighting dangerous climate change.

There is every reason to step up the efforts in reducing CO2 emissions. The Kyoto Protocol does not go nearly far enough yet, but it provides the one and only operative framework to meet this challenge in a concerted worldwide effort. Even after the US abandoned it, European countries, Russia, Canada and Japan have stuck to the protocol. But it is now time that the US enters the game. The protocol might survive until 2012 without the US, but it does not stand a chance without the US after that date, when real and large reductions need to start. Trying to involve the US in the post-Kyoto process by watering down the current agreements has not proved to be a promising path. More importantly, our climate does not need a light version of the protocol, but the opposite. We propose another option: economic pressure with border taxes and countervailing duties. As long as the US fails to join the rest of the world in tackling climate change, the EU should impose taxes on imported goods from the US and, alternatively, redress the added production costs of European goods exported to the US. A European ‘climate levy’ on products from the US (and Australia, the other industrialised country not complying with the protocol) would be applicable to all energy-intensive products, such as chemicals, aircrafts, cars, agricultural products and steel. A climate levy would level the playing field between the European companies and the US counterparts.

The EU does have a good chance to win any possible dispute over such a border tax. The World Trade Organization allows states to impose these countervailing duties to offset the competitive trade advantage that foreign companies gain when they receive subsidies from their government. In this case the US government does not give direct subsidies, but indirectly favours its industry by not imposing climate policy on them.

Since 1997 the EU has believed that the strategy of ‘leading the way’ and compromising the protocol to the wishes of the US was strategically and tactically the course which served the world’s interests best. Unfortunately this strategy has not brought the US in. Time is now simply running out. It is effective, appropriate and legitimate for the EU to use economic measures, including trade measures against those who do not comply with the Kyoto Protocol.